ARCO settlement

Susan Schroeder swoons for
DA Tony Rackauckas
Photo by Yoshitaka Okada
Orange County District Attorney Tony Rackauckas has known for more than a month that OC Weekly was investigating his conduct in the county's environmental corruption case against ARCO. He and his office rebuffed every attempt for access to public records and interviews. In fact, Susan Kang Schroeder—the DA's unofficial media advisor and a central figure in the grand jury's unflattering audit report of the office—refused to allow the agency's official, full-time media director to answer a single question from us. We were told, "Susan says she will handle the Weekly herself." The way she handled us was by never returning calls or e-mail.

So it wasn't surprising when, on Dec. 17, the DA's office settled the ARCO case and invited everyone in the local media to question him about the deal.

Everyone--except the Weekly.

It was a textbook public-relations move. Our brethren in the local daily press corps couldn't think of a tough question to ask, and ended up celebrating a highly questionable, pro-polluter settlement. For example, reporters at The Orange County Registerfailed to find (or, worse, did not look for) even one of the numerous knowledgeable critics of the deal. Instead, reporters Larry Welborn and Pat Brennan quoted only Rackauckas and an ARCO spokesman—who were, of course, giddy.

Reportorial incompetence wasn't merely a one-day phenomenon. On Dec. 19--two days after the announcement--the Register's Chris Reed told KPCC's Talk of the City that the settlement was "a real celebration for Rackauckas." The Reg's daily rival was equally saccharine. Demonstrating their ignorance of the four-year-old case, the Orange County edition of the Los Angeles Times printed this headline: "DA wins big money pledge from ARCO to clean up MTBE."

Big money?

Let's do what the daily papers didn't. Let's consider the $8 million settlement in context. Five million dollars is to repay the county for legal expenses and the other $3 million will go to what ARCO was supposed to be doing all along: preventing leaks of MTBE and other toxic chemicals from its numerous faulty underground gas storage tanks in Orange County. For an idea of the extent of the leaks, consider that at just one ARCO station in Fountain Valley, MTBE was found almost 700,000 times greater than the danger threshold. Then consider that there were leaks at more than 100 local ARCO stations, each leak threatening the county's precious public water supply.

But the case revealed an even more sinister element. The DA had convincing evidence that the oil companies did little to correct the problem even though they knew for decades that MTBE was dangerous and that their gas storage tanks leaked. We know this, in part, because county inspectors repeatedly issued violation notices to ARCO over the years. If the DA was telling the truth in statements made in court filings, ARCO's routine response to the inspectors was, to put it politely, "Bug off."

So we have a company that not only polluted, but did so knowingly, and in the process violated a long series of laws that called for penalties ranging from $500 to $5,000 per day per leak. The law is unambiguous. It says violators shall pay the penalties. DA sources familiar with the case say that the list of ARCO's extensive violations was so offensive that fines for the last decade alone could have topped $1 billion.

But even with this settlement, the company has paid no county fines as a result of its misconduct. In a legal nuance that favors the oil companies, inspectors who uncover violations are prohibited from enforcing them. Only the DA can force oil company polluters to publicly acknowledge their illegal conduct and pay.

Note that Rackauckas did not require ARCO--now BP Amoco, a UK-based conglomerate worth conservatively $80 billion--to pay even $1 in civil penalties or to admit any wrongdoing. And unlike his cocky admonition to Arthur Carmona--the youngster who was wrongly convicted of robbery, but later freed when the case was exposed as a fraud in 2000--Rackauckas had no tough words for the world's third-largest oil company. On the contrary, at his press conference he actually thanked them for their alleged cooperation.

In a Securities and Exchange Commission filing earlier this year, BP Amoco confidently told its shareholders that they had no fear of any environmental prosecution against the company--including the Orange County case. Any settlement will have no "adverse effect" on profits, they predicted. Since the DA's staff filed suit in 1999, the company has paid its ordinary shareholders more than $31 billion in profit. Subtracting the $3 million they should have been paying all along to monitor their MTBE leaks in the county, Rackauckas only "won" the county reimbursement for attorney costs.

Somebody is laughing and it's probably BP Amoco executives and their lawyers. Said a DA source familiar with the case, "If an Orange County jury had ever heard the case against ARCO, I am positive that they would have made the company pay more than $100 million for their outrageous conduct."

Dealing with Rackauckas was a relatively pleasant experience for the oil giant that made $910 million a month in profit during 2000. The DA, who once said his case was based on the "biggest" MTBE contamination in the nation, let the polluter walk away by paying less than .04 percent of its annual profit.

Rackauckas can't be bothered with such facts. He's just happy. In his settlement press release, the county's top lawman was proud to note that ARCO executives "indicated a desire to work with my office to ensure violations do not occur again so we can keep Orange County's drinking water safe today and into the future."

Don't you feel safe now?


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